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Course 2018-2019 a.y.

30375 - MATHEMATICS - MODULE 2 (APPLIED)

WBB
Department of Decision Sciences

Course taught in English


Go to class group/s: 31

WBB (6 credits - I sem. - OBCUR  |  SECS-S/06)
Course Director:
LAURA MARIANO

Classes: 31 (I sem.)
Instructors:
Class 31: LAURA MARIANO


Mission & Content Summary
MISSION

Investing and financing are key areas in financial management. Investing requires ability to make efficient and profitable investment strategies deciding which asset a company should acquire at the best market and economic conditions. Defining a financing strategy is essential to the continuity of a business over the long term. The objective of this course is to provide a background in financial mathematics. It covers a diverse range of topics, from the basic concept of final value and present value to market interest rates and asset evaluations preparing students for positions in management, financial organizations or advanced work in financial markets. Being a branch of applied mathematics, financial mathematics analyses a given problem through mathematical models. The ability to think analytically is a success factor for students in their career.

CONTENT SUMMARY
  • Accumulation and discount; present value and final value of a cash flow.
  • Loan repayment, the cost of financing.
  • Fixed income bond valuation, the rate of return of an investment.
  • The term structure of interest rates.
  • Cash flow duration and immunization.
  • Project evaluation using Net Present Value and some extensions.
  • Introduction to the one-period binomial model for European option valuation.

Intended Learning Outcomes (ILO)
KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Identify mathematical and financial tools for solving corporate problems.
  • Explain the principles of loan repayment.
  • Describe the main characteristics of fixed income bonds.
  • Discuss the profitability of a financial project.
APPLYING KNOWLEDGE AND UNDERSTANDING
At the end of the course student will be able to...
  • Use the basic mathematical and financial tools to assess corporate activities (accumulation, discount).
  • Analyse the rate of return of an investment and the cost of financing.

Teaching methods
  • Face-to-face lectures
  • Exercises (exercises, database, software etc.)
  • Group assignments
DETAILS

Teaching and learning activities of this course include, in addition to face-to-face lectures, the solution in class of exercises and the assignment of a group work. Those exercises allow students to apply the concepts illustrated during the course and assess their understanding through two in-class quizzes.  Moreover stylized cases are proposed to students as group assignment and discussed in class with the purpose of interpreting real applications using the models explained during the course. Students are encouraged to attend the course on a regular basis.


Assessment methods
  Continuous assessment Partial exams General exam
  • Written individual exam (traditional/online)
  •     x
  • Individual assignment (report, exercise, presentation, project work etc.)
  •   x  
  • Group assignment (report, exercise, presentation, project work etc.)
  •   x  
    ATTENDING STUDENTS

    With the purpose of measuring the acquisition of the above-mentioned learning outcomes, the primary method of assessment for this course is a combination of a written examination, group homework and individual quizzes. The final grade is equal to the weighted average 10% group work + 20% quiz + 70% final exam rounded up:

    1. Two quizzes (20% of the final grade, the lowest two quiz scores are dropped) with closed-ended questions. These quizzes must be worked on independently in class with the support of notes or textbooks, and are aimed to test the ability to recognize basic knowledge and concepts regarding financial calculus. The score granted with quizzes is valid for the whole academic year.
    2. A group work (10% of the final grade). Each group should submit the results on paper for evaluation and prepare a short presentation to discuss the main outcomes in class. This assignment is aimed to test the ability to identify and examine investment and financing problems, the ability to work within a team and to summarize/communicate concisely the results of the work completed. The score granted with the group is valid for the whole academic year.
    3. Written exam (70% of the final grade), consisting of two open answer questions and one short answer question regarding the whole course syllabus, aimed  to assess students’ ability to apply the analytical tools illustrated during the course. This exam must be worked on independently in class.
    NOT ATTENDING STUDENTS

    Students’ assessment are based on a written exam consisting of 3 open answer questions and 2 short answer questions regarding the whole course syllabus. The final grade is equal to the mark granted in this final exam. Remark: students undertaking both quizzes and the group work are allowed to choose between modality for attending students and modality for non-attending students.


    Teaching materials
    ATTENDING AND NOT ATTENDING STUDENTS
    • E. CASTAGNOLI, M. CIGOLA, L. PECCATI, Financial Calculus with Applications, Milano, EGEA, 2013.
    • G. GURIOLI, Introduction to the Valuation of Investments, Milano, 2009 (PDF available on Bboard).

    Further reading:

    • S.A. BROWERMAN, Mathematics of Investment and Credit, ACTEX, Winsted CT, 2015, 6th Ed.(ISBN: 978-1-62542-485-3).
    Last change 23/07/2019 16:39